Guest View: Basic Economics Can Inform Citizens

The future of the United States is under a threat that can be averted if citizens start asking for better economic information. Politicians and reporters who ignore basic economics are dividing the country by influencing people emotionally to support proposed laws and to think unkindly of those who disagree. Fortunately, ther...

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By Robert Van Lente Chairman of the Ionia County Republican Party

Ionia Sentinel - Standard-Ionia, MI

By Robert Van Lente Chairman of the Ionia County Republican Party

Posted Apr. 23, 2013 at 11:40 PM
Updated Apr 23, 2013 at 11:59 PM

By Robert Van Lente Chairman of the Ionia County Republican Party
Posted Apr. 23, 2013 at 11:40 PM
Updated Apr 23, 2013 at 11:59 PM

IONIA COUNTY, Mich.

The future of the United States is under a threat that can be averted if citizens start asking for better economic information. Politicians and reporters who ignore basic economics are dividing the country by influencing people emotionally to support proposed laws and to think unkindly of those who disagree. Fortunately, there are credible news sources that citizens can use to investigate the real effect of laws being proposed.

Thomas Jefferson and James Madison worried that the United States could fail if citizens were not informed about issues. So it is easy to consider how alarmed those two Founding Fathers would be today. They would see elected officials and journalists failing to account for many of the predictable effects of significant proposals in Congress. They would see complex issues so oversimplified that citizens are robbed of any opportunity to form reasonable opinions about real economic impacts.

Jefferson and Adams would see “the fallacy of overlooking secondary consequences,” a term coined by Henry Hazlitt in his book titled “Economics in One Lesson: The Shortest and Surest Way to Understand Basic Economics.” The term describes the irresponsibility of proponents on many issues who fail to look beyond the immediate results and primary consequences that would affect one special group. They don’t study and report the results in the long run, or the secondary consequences, or the effects on everyone.

When politicians and reporters describe a proposal by showing only an immediate positive benefit to a limited group of people, they make the proposal sound very generous and appealing, and they make those who oppose the idea sound uncaring and greedy; not willing to pay “their fair share.” So some citizens are lured into liking the proposal, and disliking those who oppose it.

A recent example is the proposal to raise the minimum wage. For sure, there is an immediate benefit from doing that: some workers will get a raise and have greater spending power. This is easy to see and easy to like because it is immediate and positive. But what is not seen? Or not seen right away? It’s this: most studies show that some low-skilled workers actually lose their jobs when the minimum wage is raised. Their spending power disappears. Of course, some employers might not fire any workers at all because they can raise their prices. But when that happens, those prices are paid by the people who buy the employers’ goods or services – reducing the spending power of those consumers. In short, one special group gets an immediate benefit but other groups, over time, are harmed.

Another example is campaign reform that limits how much money a citizen can contribute to a candidate for public office. The published intent is to limit the influence of “big money” in elections. Again, the immediate effect is easy to see and maybe even like: rich people can’t try to influence elections with large donations to candidates they like. But something else happens. The limits on donations actually put the incumbent – the official already in office - at a significant advantage.

Page 2 of 2 - Why? Because an incumbent gets contributions from a larger network of donors developed during previous campaigns and also from special interest groups who have no reason to support a challenger unless that challenger gets elected. The immediate “positive” effect is that all candidates can accept only so much money from each source. But Incumbent candidates, who have access to a greater number of sources, end up with more campaign money than their challengers.

The first thing citizens can do to protect themselves from irresponsible proposals is to simply start asking questions. Whenever someone describes the purpose of legislation, or a journalist reports it, citizens can ask: “Could there be other immediate effects not studied? What about later on? Could there be any other people affected who have not been described?” And if the answer is “yes, a lot was left out,” then the citizen can stop trusting that source of information when making decisions about proposals or candidates.

Local news sources don’t have the resources to ask these questions. But it is easy to find good sources for more complete coverage. On the Internet there are: Real Clear Politics, National Review Online, Jewish World Review, and The Heritage Foundation. For someone who is willing to pay for a hefty print subscription there are: The Wall Street Journal, Washington Times, or New York Post. Further, there are magazines that are less expensive: National Review, The Weekly Standard, and Reason Magazine. Finally, on Television, Fox News provides two reliable programs: Your World with Neil Cavuto and Special Report with Bret Baier. Citizens concerned about their country would be wise to add one or more of these sources to their search for more responsible coverage of national issues.

Citizens who rely on these sources are usually the ones who can describe, as Paul Harvey used to say, “The rest of the story!”

Jefferson and Adams might well recoil if they could hear the popular political discourse today. And they would worry about the future of their grand design if that discourse were not improved. Their thinking was expressed by John Philpot Curran who in 1808 said: “The condition upon which God hath given liberty to man is eternal vigilance…”

Vigilance. Listening and reading carefully. Asking questions. Being as guarded and inquisitive as if danger were right around the corner.